Answer:
At the fourth stage of the consumer purchase decision process, I have passed the stages of need recognition, information search, and option evaluation. This means I have chosen a brand of car to buy, perhaps a Toyota camry 2020 model. What is left is for me to go ahead and make the purchase. What I need to do now is to select the automobile dealer to buy from, decide the exact date to make the purchase, and how I will pay for the car. I will then approach the dealer to negotiate the best deal. I will ask for testing and then sign the papers for the final purchase.
2. Evaluation Criteria: According to the Organization for Economic Cooperation and Development, there are five criteria for evaluating a decision. They are relevance, efficiency, effectiveness, impact, and sustainability. These interdependent criteria provide the decision-maker with the essential information and clues to understand the situation and determine what should be done next.
3. Consideration Set: These are the alternatives which consumers actively consider before making their final purchase decision. For example, to purchase a car, the purchaser could have decided a brand from among all others. All the brands from which she chooses a particular brand is the consideration set. She could also consider the models of a particular brand. In that case, the set of models is the consideration set.
Explanation:
The five stages of the consumer purchase decision process are:
1) Need Recognition - when the consumer identifies the need, problem, or gap for the purchase.
2) Information Search - this is the time that information is gathered about how to fill the gap and meet the need.
3) Option Evaluation - is the stage for identifying the options (alternatives) that are available for solving the need problem.
4) Purchase - is the actual solution to the problem.
5) Post-purchase evaluation is the time for asking if the need had been met with the purchase or expressing regret for choosing one option against the other. It is the time the consumer knows if her need had been satisfied.
It is important to reduce your debt in order to (afford/ increase /improve) your credit?
Paying down a debt as quickly as possible can help (distribute/ eliminate/ reduce) interest owned?
Checking your credit report can help you (decrease interest payments/ monitor your information/ reduce your debt)?
Answer:
1. Improve
2. Reduce
3. Monitor your information
Explanation:
1. When you have a lot of debt to your name, it reduces your credit and presents you as a risky individual who will be unable to take on more debt because they haven't finished paying off the others that they have. You will be more of a credit risk and this will reduce you're credit.
2. Interest is charged on the remainder of your debt. If you pay off your debt faster, there will be less of an amount for interest to be charged on so it will reduce.
3. It is important to check your credit report as often as you can. It will help you monitor your information so that you can make adjustments to it or to your lifestyle if need be. You can find out if information is in anyway incorrect and act on it under The Fair Credit Reporting Act (FCRA) if necessary.
Inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error? a. net income is understated b. gross profit is understated c. stockholders' equity is overstated d. cost of goods sold is overstated
Answer:
The answer is stockholders' equity is overstated
Explanation:
When inventories are overstated it reduces the cost of sales because the excess inventory in accounting records means the ending inventory will be higher and cost of sales will be lower.
When ending inventory is overstated, total assets and retained earnings will be overstated. And when retained earnings is overstated, stockholders' equity is also overstated because retained earnings is a line item under stockholders' equity.
Solis Company uses the FIFO method to compute equivalent units. It has 4,000 units in beginning work in process, 20% complete as to conversion costs and 50% complete as to materials costs, 66,000 units started, and 6,000 units in ending work in process, 30% complete as to conversion costs, and 80% complete as to materials cost. How much are the equivalent units for materials under the FIFO method
Answer:
The equivalent units for materials under the FIFO method are 68,800 units
Explanation:
Equivalent units is a measurement of number of units completed in terms of percentage of inputs of production in output inventory.
Calculation of Equivalent Units under FIFO method.
To finish Opening work in process ( 4,000 units × 50%) = 2,000
Started and Completed units (66,000 - 4,000) × 100% = 62,000
Closing Work In Process (6,000 × 80%) = 4,800
Equivalent units of Production = 68,800
Conclusion :
The equivalent units for materials under the FIFO method are 68,800 units.
Major Manuscripts, Inc.
2012 Income Statement
Net sales
$
7,800
Cost of goods sold
6,865
Depreciation
210
Earnings before interest and taxes
$
725
Interest paid
31
Taxable Income
$
694
Taxes
284
Net income
$
410
Dividends
$
187
Major Manuscripts, Inc.
2012 Balance Sheet
2012
2012
Cash
$
2,400
Accounts payable
$
1,550
Accounts rec.
880
Long-term debt
300
Inventory
2,700
Common stock
$
3,100
Total
$
5,980
Retained earnings
4,430
Net fixed assets
3,400
Total assets
$
9,380
Total liabilities & equity
$
9,380
Major Manuscripts, Inc., is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. In 2013, no new equity will be raised and sales are projected to increase by 10 percent. Construct the pro formas for 2013 and answer the following questions (show your work!).
Projected total assets= $______
Projected retained earnings= $______
Additional new debt required= $______
Answer: Projected total assets = $10,318
Projected retained earnings = $4,675.30
Additional new debt required = $537.70
Explanation:
external financing needed ( EFN )= [(total assets/total sales) x ( sales )] - [(total current liabilities/total sales) x ( sales )] - [profit margin x forecasted sales in $ x (1 - dividend payout ratio)]
total assets = $9,380,
projected total assets = $9,380 x 1.1 = $10,318
total sales = $7,800
sales = $780
current liabilities = $1,550
profit margin = net income / sales
= $410 / $7,800
= 0.052564
forecasted sales = $7,800 x 1.1 = $8,580
dividends payout ratio = dividends / net income
= $187 / $410
= 0.4561
Therefore:
EFN = [($9,380/$7,800) x ($780)] - [($1,550/$7,800) x ($780)] - [0.052564 x $8,580 x (1 - 0.4561)]
EFN = $938 - $155 - $245.30
EFN = $537.70
projected retained earnings = current retained earnings - projected net income - projected dividends
= $4,430 + $451 - $205.70
= $4,675.30
When using the allowance method of accounting for uncollectible accounts, the recovery of a bad debt would be recorded as a debit to Cash and a credit to Bad Debts Expense.
a. True
b. False
Answer: False
Explanation:
A bad debt is a debt that is unlikely to be paid by the debtor and hence, the company has already written it off as the creditor is not ready to collect it anymore.
The information provided in the question is not correct. When using the allowance method of accounting for uncollectible accounts, the recovery of a bad debt would be to debit the accounts receivable and credit the allowance for doubtful debts.
"Total revenue equals the price multiplied by the quantity. The relative change price and quantity is given by the concept of ________________."
Answer:
Elasticity
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded.
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
I hope my answer helps you
Peroni Corporation sold a parcel of land valued at $300,000. Its basis in the land was $250,000. For the land, Peroni received $75,000 in cash in the current year and a note providing Peroni with $225,000 in the subsequent year. What is Peroni's recognized gain in the current and subsequent year, respectively
Answer:
Peroni's recognized gain in the current and subsequent year is $12,502 and $37,507
Explanation:
In order to calculate Peroni's recognized gain in the current and subsequent year we would have to calculate first the Gross profit on sale with the following formula:
Gross profit on sale=(parcel of land sold-land basis)/parcel of land sold
Gross profit on sale=($300,000-$250,000)/$300,000
Gross profit on sale=16.67%
Hence, Peroni's recognized gain in the current and subsequent year would be as follows:
current year=amount received in cash*Gross profit on sale
current year=$75,000*16.67%
current year=$12,502
subsequent year=$225,000*16.67%
subsequent year=$37,507
Peroni's recognized gain in the current and subsequent year is $12,502 and $37,507
On March 12, Medical Waste Services provides services on account to Grace Hospital for $10,900, terms 3/10, n/30. Grace pays for those services on March 20.
Required:
For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20.
Answer:
March 12
Dr Accounts Receivable 10,900
Cr Service Revenue 10,900
March 20
Dr Cash 10,673
Dr Sales Discounts 327
Cr Accounts Receivable 10,900
Explanation:
Preparation of the Journal entry For Medical Waste Services,on March 12 and the collection of cash on March 20.
Journal entry to record the service on account on March 12
Since we were told that Medical Waste Services provides services on account to Grace Hospital for $10,900 on March 12, this means the transaction will be recorded as:
March 12
Dr Accounts Receivable 10,900
Cr Service Revenue 10,900
Journal entry to record the collection of cash on March 20.
Since we were told that Grace pays for those services on March 20 for the terms of 3/10, n/30 this means that the transaction will be recorded as:
March 20
Dr Cash 10,673
(10,900-327)
Dr Sales Discounts 327
(10,900×3%)
Cr Accounts Receivable 10,900
Suppose that a firm in a competitive market faces the following revenues and costs: At which level of production will the firm maximize profit
Answer:
Inventar (no copiar de internet) un microcuento fantástico con alguno de los siguientes hechos sobrenaturales o inverosímiles: fantasmas, transformaciones, poderes increíbles, etc.
Explanation:
Answer:
Profit max in com P = MR = MC
Explanation:
Profit max in com P = MR = MC
Raise MR>MC
Lower MR<MC
You are given the following information for Ted’s Dread Co.: sales = $82,000; costs = $57,700; addition to retained earnings = $7,500; dividends paid = $3,320; interest expense = $3,030; tax rate = 25 percent. Calculate the depreciation expense for the company.
Answer:$6,843.33=Depreciation
Explanation:
To Calculate the depreciation expense for the company
Net income = Dividends + Addition to retained earnings
Net income = $3,320 + 7,500
Net income = $10,820
Also,
Net income = Taxable income - (Taxable income)(Tax rate)
Net income = Taxable income(1 - Tax rate)
Therefore,
Taxable income = Net income / (1 - Tax rate)
Taxable income = $10,820 / (1 - 0.25
Taxable income = $10,820/0.75 =14,426.67
But
EBIT -interest = taxable income,So
EBIT = Taxable income + Interest
EBIT = $14,426.67+3,030
EBIT = 17,456.67
EBIT = Sales - Costs - Depreciation
$17,456.67 = $82000 - 57,700 - Depreciation
$17,456.67= 24,300-Deprecistion
Depreciation =24,300-17456.67 =
$6,843.33
What are the portfolio weights for a portfolio that has 115 shares of Stock A that sell for $43 per share and 180 shares of Stock B that sell for $19 per share
Answer:
The answer is:
Stock A: 0.5912
Stock B: 0.4088
Explanation:
The amount invested in stock A:
Number of shares x price per share
115 sharesx $43
= $4,945
The amount invested in stock B:
Number of shares x price per share
180 shares x $19
$3,420
Total amount invested
$4,945 + $3,420
=$8,365
The portfolio weight for A:
$4,945/$8,365
= 0.5912
The portfolio weight for B:
$3,420 /$8,365
= 0.4088
Louie Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $112,000; benefits paid to retirees, $10,000; interest cost, $7,500. The discount rate applied by the actuary was 10%. What was the service cost for the year
Answer: $39,500
Explanation:
Service Cost for the year = Ending PBO - Opening PBO - Interest cost + Benefits paid
Opening PBO
Opening PBO is the amount that the interest was charged on.
Discount rate of 10% came out to be $7,500.
The opening balance = 7,500/10%
= $75,000
Service Cost = 112,000 - 75,000 - 7,500 + 10,000
Service Cost for the year = $39,500
A client believes that XYZZY stock has topped out in price and is ready for a steep drop. What recommendation would give the customer the smallest profit if this occurs
Answer: Buy XYZZ stock and sell an XYZZ call
Explanation:
Since the buyer seems convinced that XYZZ stock has bottomed its price, he should purchase the stock since it has gotten to its cheapest Point.
And since he believes that XYZZ's price would rebound soon, He should exercise a little patience and not sell at a call option for XYZZ. Because if he attempts to sell at a call option then his earnings becomes very limited, since the price set at the call option would be very low.
My best advice would be for him to hold on to XYZZ stock for a while and allow for its price to rebound.
You are an analyst working for a mutual fund. Your job is to select stocks for the fund. You want to select only one of the following tech stocks to add into your current portfolio: Appscale, Bitwise, and Carbivore. All three stocks are similar along many metrics. They are all in the technology space and have been growing very fast over the past few years. However, it is hard to get all the information for those three stocks, and so far you have collected only the following relevant information to help you make the decision: Appscale is a tech firm that focuses on developing and integrating mobile apps. Reading through analyst reports and based on your own judgement, you think the cost of equity for Appscale is 12%. Appscale estimated earnings per share next year are $10. It pays all its earnings as dividends. Bitwise is a fintech company that is involved in Bitcoin and blockchain technology. Currently, Bitwise stock is trading at $100/share, with estimated earnings next year of $10/share. You read from their management disclosure and financial report that Bitwise retains 40% of their earnings for investments. Its reinvestment rate of return is 10%. Carbivore is a biotech firm that promotes and advocates sustainable food choices. The one period holding return is 10%.
What is the current price of Appscale?
a. $120/share
b. $83/share
c. Not enough information
Answer:
a. $120/share
Explanation:
The market value of a company is total value of a business. It is calculated by multiplying number of outstanding share with market value per share. This is also known as Market Capitalization. Cost of equity is the rate of return required by the equity holders of the company. The company decides its cost of equity based on the risk level of its business. The market price for Appscale will be:
Ke 12%
EPS $10
Market value is $120/share
(12% * $10 per share)
Hudson Corporation will pay a dividend of $3.60 per share next year. The company pledges to increase its dividend by 4.60 percent per year indefinitely. If you require a return of 7.00 percent on your investment, how much will you pay for the company's stock today
Answer:
The maximum that should be paid for the stock of the company today is $146.64
Explanation:
The current price of the stock can be calculated using the constant growth model of DDM. The DDM values the stock based on the present value of the expected future dividends from the stock.
The formula for the price of the stock today under the constant growth model is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 is the most recent dividend paid
D0 * (1+g) is the dividend expected to be paid next period
r is the required rate of return
g is the growth rate in dividends
As we don't have a D0 but instead are given a D1, the constant growth rate will be applied from year 2 and we will calculate the price of the stock at year 1 using the constant growth model and discount is back one year to calculate the price of the stock today.
P1 = D1 * (1+g) / r - g
P1 = 3.6 * (1+0.046) / (0.07 - 0.046)
P1 = $156.9
Price of the stock today is,
P0 = P1 / (1+r)
P0 = 156.9 / (1+0.07)
P0 = $146.635514 rounded off to $146.64
If the total debt ratio is 36%, and the allowable mortgage debt ratio is 28%, which of the following debt ratios would a loan applicant qualify for if:
a. The loan applicant's gross monthly income is $2,500, with a mortgage payment of $600
b. A car payment of $250, and minimum monthly credit card payment of $75
Answer:
The loan applicant would qualify for the mortgage debt ratio in option a because his mortgage debt ratio is 24% and the allowable mortgage debt ratio is 28%.
Explanation:
First, you have to calculate the debt ratio in each case. It is calculated by dividing the total debt by the income.
a. Debt= $600
Income= $2,500
Mortgage debt ratio=600/2,500= 0.24→24%
b. Debt=$600+$250+$75=$925
Income=$2,500
Total Debt ratio=925/2,500= 0.37→37%
The loan applicant would qualify for the mortgage debt ratio because his mortgage debt ratio is 24% and the allowable mortgage debt ratio is 28%. The loan applicant would not qualify for the total debt ratio because his ratio is 37% and the allowable total debt ratio is 36%.
Misty, Ibtihaj, and Taraji, all African Americans, work in the advertising department of a large cosmetics company with a multi-cultural employee base. One day, while eating lunch with Misty and Ibtihaj, Taraji noted that most of the counter displays and advertisements for the company’s products featured light-brown-skinned women. The women discussed the problems with this approach to advertising and decided that the major problem was that women of other skin tones had no way to know what the product would look like on their skin. They developed an advertising campaign that included women of a wide spectrum of skin tones. How has diversity awareness most benefited this company? Group of answer choices It has provided a narrower range of perspectives for more critical analysis of the issues. It has given the company an edge in hiring by allowing it to attract and retain the best personnel. It has provided less conformity to norms of the past and improved the level of creativity. It has broadened the marketing efforts to include a wider customer base which could improve sales.
Answer:
It has broadened the marketing efforts to include a wider customer base which could improve sales.
Explanation:
Advertising to a broader customer base will both convince that larger customer base that the company has something to offer. For many, the obvious diversity awareness of the company will be an additional factor attracting increased sales and a more diverse hiring pool.
Ace Industries has current assets equal to $3 million. The company's current ratio is 1.5, and its quick ratio is 1.1. What is the firm's level of current liabilities? What is the firm's level of inventories? Do not round intermediate calculations. Round your answers to the nearest dollar. Current liabilities: $ 2000000 Inventories:
Answer:
Current Liabilities = $2000000
Inventories = $800000
Explanation:
The current ratio and quick ratios both are measures to assess the liquidity position of businesses. These are useful indicators of how well the business is equipped to meet its current obligations using its most liquid assets.
The current ratio is calculated as follows,
Current Ratio = Current Assets / Current Liabilities
The quick ratio is calculated as follows,
Quick Ratio = (Current Assets - Inventories) / Current Liabilities
To calculate the inventory level, we must first determine the value of current liabilities using the current ratio.
1.5 = 3000000 / Current Liabilities
Current Liabilities = 3000000 / 1.5
Current Liabilities = $2000000
Using the quick ratio, we can calculate the level of inventories.
1.1 = (3000000 - Inventories) / 2000000
1.1 * 2000000 = 3000000 - Inventories
2200000 = 3000000 - Inventories
Inventories = 3000000 - 2200000
Inventories = $800000
Consider the following timeline detailing a stream of cash flows: The timeline starts at Date 0 and ends at Date 4. The cash flow on Date 0 is indicated by a question mark. On Date 1, the cash flow is 100 dollars. On Date 2, the cash flow is 100 dollars. On Date 3, the cash flow is 200 dollars. On Date 4, the cash flow is 200 dollars. If the current market rate of interest is 6%, then the present value (PV) of this stream of cash flows is closest to:
Answer:
$509.68
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
cash flow in year 1 = $100
cash flow in year 2 = $100
cash flow in year 3= $200
cash flow in year 4 = $200
I = 6%
PV = $509.68
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,500 monthly. The contract currently sells for $115,000. What is the monthly return on this investment vehicle
Answer:
1.3%
Explanation:
To find the monthly return , the formula is =
Interest payment/ present value
$15,000 / $115,000 = 0.013043 = 1.3%
I hope my answer helps you
Explain whether the following statement is true or false. There is no mark for stating true or false; the mark is awarded for the explanation and the illustration only.
One way in which monopolistic competition differs from oligopoly is there are no barriers to entry in oligopolies.Immersive Reader
Answer:
The statement is false.
Explanation:
Oligopoly is a market situation where the market of a given good or service is dominated by a few strong, powerful providers. It could be described as a mix between monopoly and perfect competition, where there are several players in the market, but not so many that they can not influence the market price, and in which those providers are strong enough to establish a monopoly if they could. Examples of oligopoly markets are the market for cars and oil, among others, in which there are few but powerful enterprises in the market.
In oligopolies there are almost as many barriers as in monopolies: although there is competition between companies, for a new company it is almost impossible to enter the market since prices, quality and customers are retained by companies already established in the market.
Corporation has the following equity investments held throughout 2021–2022: Fair Value Cost 12/31/21 12/31/22 $600,000 $800,000 $760,000 What amount would be reported as accumulated other comprehensive income related to investments on the balance sheet at December 31, 2022?
Answer: $40,000 loss
Explanation:
A balance sheet is also referred to as the statement of financial position and it is a summary of financial balances of an economic agent i.e individual or organization.
The amount that would be reported as accumulated other comprehensive income related to investments on the balance sheet at December 31, 2022 will be:
= 800,000 - $760,000
= $40,000
There will be a $40,000 loss because the fair value on 12/31/21 of $800,000 is higher than the fair value of $760,000 on 12/31/22.
The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
April 30 May 31
Inventories
Raw materials $ 43,000 $ 52,000
Work in process 10,200 21,300
Finished goods 63,000 35,600
Activities and information for May
Raw materials purchases (paid with cash) 210,000
Factory payroll (paid with cash) 345,000
Factory overhead
Indirect materials 15,000
Indirect labor 80,000
Other overhead costs 120,000
Sales (received in cash) 1,400,000
Predetermined overhead rate based on direct labor cost 70 %
rev: 06_09_2015_QC_CS-17114
Exercise 15-8 Journal entries for materials LO P1
1. Raw materials purchases for cash.
2. Direct materials usage.
3. Indirect materials usage.
Exercise 15-9 Journal entries for labor LO P2
1. Direct labor usage.
2. Indirect labor usage.
3. Total payroll paid in cash.
Prepare journal entries for the above transactions for the month of May.
Transaction General Journal Debit Credit
1
Answer:
Exercise 15-8
1. Raw materials purchases for cash.
Raw Materials $210,000 (debit)
Cash $210,000 (credit)
2. Direct materials usage.
Work In Process : Indirect Materials $186,000 (debit)
Raw Materials $186,000 (credit)
3. Indirect materials usage.
Work In Process : Direct Materials $15,000 (debit)
Raw Materials $15,000 (credit)
Exercise 15-9
1. Direct labor usage.
Work In Process : Direct Labor $265,000 (debit)
Salaries and Wages Payable $265,000 (credit)
2. Indirect labor usage.
Work In Process : Indirect Labor $80,000 (debit)
Salaries and Wages Payable $80,000 (credit)
3. Total payroll paid in cash.
Salaries and Wages Payable : $345,000 (debit)
Cash $345,000 (credit)
Explanation:
Raw Materials - T Account (To determine the Materials Transferred to Production)
Debit
Opening Balance $ 43,000
Add Purchases $210,000
Totals $253,000
Credit
Closing Balance $ 52,000
Transferred to Production (Balancing figure) $201,000
Totals $253,000
Thus, Direct Materials = $201,000 - 15,000 = $186,000
Answer:
Explanation:
Raw materials purchases for cash.
Direct materials usage.
Indirect materials usage.
Prepare journal entries for the above transactions for the month of May.
DEBIT CREDIT
A 1 Raw materials inventory 2 10,000
Cash 210,000
B 2 Work in process inventory 186,000
Raw materials inventory 186,000
C 3 Factory overhead 15,000
Raw materials inventory 15,000
The tests of whether a diversified company's businesses exhibit resource fit do not include whether:
a. the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.
b. the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses.
c. the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating.
d. a business adequately contributes to achieving the corporate parent's performance targets.
e. the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into.
Answer: a. the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.
Explanation:
Resource fit refers to a situation where the various businesses under a company have adequate access to resources from the parent company to enable them to be successful and that the parent company should not only be able to fund these businesses but also have the skills required to run them.
All the options exhibit this except option A. This is because the company should be able to fund its businesses regardless of if it is by debt or otherwise. They just need to be able to fund the businesses should the need arise.
Allowance for Doubtful Accounts has a debit balance of $800 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $556,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts
Answer:
$15,880
Explanation:
The Bad Debt Expense = $16,680 ($556,000 x 3%)
This will be credited to the Allowance for Doubtful Accounts and debited to the Bad Debt Expense account. When balancing the Allowance for Doubtful Accounts (the Uncollectible Accounts), the $800 debit balance will be netted off to arrive at $15,880 as the balance.
Allowance for Doubtful Accounts is a contra asset (Accounts Receivable) account. It is a way for prudently providing for credit losses. The Bad Debt Expense account is the account where the expense for uncollectibles for the period is charged.
Western Electric has 31,000 shares of common stock outstanding at a price per share of $77 and a rate of return of 13.10 percent. The firm has 7,200 shares of 7.60 percent preferred stock outstanding at a price of $94.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $398,000 and currently sells for 110 percent of face. The yield to maturity on the debt is 8.02 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent
Answer:
Weighted average cost of capital = 11.10%
Explanation:
Market value of common stock = $31,000 * 77 = $2,387,000
Market value of preferred shares = $7,200 * 94 = 676,800
Market value of debt = $398,000 * 110% = 437,800
Total market value = Market value of common stock + Market value of preferred shares + Market value of debt
= 2,387,000 + 676,800 + 437,800
= 3,501,600
Weight of common stock = Market value of common stock / Total market value
= $2,387,000 / $3,501,600
= 0.6817
Weight of debt = Market value of preferred shares / Total market value
=437,800 / 3,501,600
= 0.1250
Weight of preferred stock = Market value of debt / Total market value
= 676,800 / 3,501,600
= 0.1933
Preferred dividend = 7.6% of 100 = 7.6
Cost of preferred stock = (Preferred dividend / price) * 100
Cost of preferred stock = (7.6 / 94) * 100
Cost of preferred stock = 8.0851%
Weighted average cost of capital = (Weight of equity *cost of equity) + (Weight of preferred stock * cost of preferred stock) + (Weight of debt * after tax cost of deb t)
Weighted average cost of capital = (0.6817 * 13.10%) + (0.1933 * 0.080851) + (0.1250 *0.0802*(1 - 0.39)
Weighted average cost of capital = 0.089303 + 0.015628 + 0.006115
Weighted average cost of capital = 0.1110
Weighted average cost of capital = 11.10%
On December 31, 2020, McDaniel Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,000 shares of its common stock for $38 per share, receiving $950,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by
Answer and Explanation:
The preparation is presented below:
McDaniel Company
Partial balance sheet
Particulars Amount
Current liabilities
Note payable $250,000
Long term debt
Note payable refinance $950,000
Total liabilities $1,200,000
We simply added the long term debt and the current liabilities so that the total liabilities could come
The US dollar/euro exchange rate is $1.6/€ while the Canadian dollar/US dollar exchange rate is C$1.25/$. You also observe that the actual euro/Canadian dollar cross exchange rate is €.65/C$. Find the triangular arbitrage profit (in USD) available to someone that has access to $1,000,000. Round intermediate steps to four decimals and your final answer to two decimals. Do not use the dollar sign when entering your answer.
Answer:
$300,000
Explanation:
I have $1,000,000 which I can use to buy C$1,250,000 (C$ = $1,000,000 x 1.25). Then I would use my C$1,250,000 to buy €812,500 (€ = C$1,250,000 x 0.65). Finally, if you use your €812,500 you can purchase $1,300,000 ($ = €812,500 x 1.6).
We started with $1,000,000 and ended up with $1,300,000 by purchasing Canadian dollars first and then Euros.
Amy has opened a new startup company in web design. Within the first month of business, the startup agrees to maintain an accounting firm's website in exchange for someone at the firm doing the startup's tax returns. Which of the following principles of economic interaction best describes this scenario?
a) Trade can make everyone better off.
b) When markets do not achieve efficiency, government intervention can improve overall welfare.
c) Markets allocate goods effectively.
d) All costs are opportunity costs.
Answer:
a) Trade can make everyone better off
Explanation:
In business, it is common to see trades. If the startup agrees to maintain an accounting firm's website in EXCHANGE for the tax returns, that is called trading since you are giving one thing for another.
Hope this helps! :)
The _____ technique consists of having multiple raters above, equal to, and below the manager providing input into a manager's evaluation.
Answer:
360-degree appraisal
Explanation:
The term being described by the question is known in business as a 360-degree appraisal. During this appraisal method, a staff member's work during a specific time interval is discussed and critiqued by various other employees as well as the supervisors, unlike other methods that focus only on the point of view of the employees' supervisors and bosses.